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Digital gold loans in India
Learn all that you need to know before getting a digital gold loan in India.
While the COVID-19 pandemic continues to batter India’s economy, a wave of new-age fintech companies and traditional lenders have started offering digital gold loans to help Indians avail gold loans without having to visit any branch.
This guide will take you through the features and costs you’d need to consider when applying for a digital gold loan.
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What are digital gold loans?
A gold loan is a secured loan wherein gold assets is provided as collateral security. But instead of bringing the gold to the lender’s branch in person, borrowers can now secure gold loans conveniently and discreetly at the comfort of their homes. This new service is thanks to online loan applications and digital-first underwriting-to-disbursal process.
Until a decade ago, most of the lending was dominated by the unorganised sector through local pawnbrokers and money lenders. But with the rapid expansion of the gold loan market in India, organised institutions like banks and non-banking finance companies (NBFCs) have shifted their focus on digitisation and streamlining their lending processes to reach a wider audience.
How do digital gold loans work?
The process for loan applications may vary from lender to lender, but taking out a digital gold loan usually consists of the following steps:
- Apply for a new loan. Most lenders will have an ‘Apply now’ button on their website. Simply provide your mobile number and other required information. A company representative will get in contact with you to and guide you through the loan process.
- Door-step evaluation. The lender will arrange for a loan manager or company representative to your address for on-the-spot evaluation of your gold jewellery. After evaluation, you’ll be offered a credit amount. This entire process usually takes less than 30 minutes.
- Receive loan proceeds. If you’re agreeable with the amount and terms, the approved credit will be transferred to your bank account.
- Gold delivered to a secure storage facility. Once the money has been transferred to your account, the representative proceeds to pack your gold ornaments in secure packages, which will be transported to a secure vault.
Benefits of digital gold loans
There are quite a few advantages to availing gold loans online:
- Convenience. There’s no need for you to bring your valuable jewellery to a physical branch since the lender will arrange for a representative to visit your location to complete the gold appraisal and loan process.
- Privacy. Customers who aren’t comfortable with being seen availing a gold loan in a public location can certainly benefit from a scheduled visit at their preferred location.
- Minimal documentation. You’ll only be required to provide your ID and proof of residential address. Unlike other loan types, there’ll be no need for documentation such as income certificates, bank statements and tax returns (ITR).
- Fast approval and cash disbursement. As lenders move towards a digital application and evaluation process, borrowers may receive their funds in as little as 30 minutes after approval.
- Online repayment. You can make payments for your gold loan instalments through an online platform or mobile app.
- Easy loan estimation. Most lenders have a gold loan calculator on their website which can provide you with a fair idea of a gold loan per gram.
- Safe storage. Lenders are required to store all gold ornaments taken as collateral in branches with an appropriate level of physical infrastructure and security measures stipulated by the Reserve Bank of India. Some non-bank financial companies (NFBC) also store the pledged gold in the vaults of their partner banks.
Which providers offer digital gold loans in India?
There are a few online banks available in India, including:
- indiagold. A gold-based lending startup and mobile app that provides instant gold loans, gold purchase and secure gold locker services in Delhi NCR (expected to be available nationwide soon).
- Rupeek. An asset-backed, digital gold loan platform based in India. The company, with partnerships with banks such ICICI Bank, Karur Vysya Bank and Federal Bank, specialises in offering hassle-free gold loans to customers without requiring them to step out of their home.
- Muthoot Finance. A popular NBFC for gold loans, Muthoot Finance has launched a Loan@Home’ app-based digital service to help borrowers avail a gold loan at the comfort and privacy of their home.
How to apply for a digital gold loan in India
With an increasing number of Indian lenders digitising their loan application process, borrowers can now get a gold loan at the comfort of their home. Instead of bringing your gold collateral to a physical branch, these lenders generally give you a call back after receiving your online application and arrange to send a loan manager directly to your address.
You’ll typically be required to submit any of the following identity documents when taking out a gold loan:
- Valid passport
- Valid driving license
- Voters’ ID card
- Aadhaar card
- PAN card or Form 60
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